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American Cooperative Serum Association v. Anchor Serum Company. No. 8563. American Cooperative Serum Association

March 4, 1946

AMERICAN COOPERATIVE SERUM ASSOCIATION
v.
ANCHOR SERUM COMPANY. NO. 8563. AMERICAN COOPERATIVE SERUM ASSOCIATION V. ILLINOIS FARM BUREAU SERUM ASSOCIATION. NO. 8564.



Author: Sparks

Before SPARKS, MAJOR and KERNER, Circuit Judges.

SPARKS, Circuit Judge.

By these actions plaintiff seeks to recover triple damages from defendants under the Federal antitrust laws, for alleged violation of Title 15 U.S.C.A. section 13(a), (c), (d) and (f).

The court submitted the case to the jury for a special verdict upon whether the plaintiff was damaged as the proximate result of the defendant's violation of that section of the statute, and if so, the amount of such damage. The verdict was that plaintiff was not thus damaged.

At the close of plaintiff's evidence, each defendant moved for a directed verdict in its favor, which was denied. At the close of all the evidence the plaintiff and each defendant filed a separate motion for a directed verdict in its favor. These were overruled.

After verdict plaintiff filed a motion to set it aside, and alternatively for a judgment in its favor, non obstante veredicto, or for a new trial. This motion was sustained, and judgment for plaintiff was entered for triple damages in the sum of $17,666.10, plus an attorney fee of $2500, upon a finding by the court that plaintiff had been damaged as a proximate result of the matters complained of in the sum of $5,888.70. Alternatively the court allowed the motion for a new trial in the event, upon appeal, the judgment entered should be reversed or set aside. Such procedure seems to be authorized by Rule 50(b), Federal Rules of Civil Procedure. Montgomery Ward and Company v. Duncan, 311 U.S. 243.

The original complaint also sought to recover for loss of volume of plaintiff's business and for its deprivation of a fair opportunity to increase such volume. At the close of plaintiff's evidence, it, by the court's permission, filed an amended complaint which omitted those two claims, and the case went to the jury on the proof relating to the allegations with respect to plaintiff's damage proximately resulting from defendant's unlawful acts in selling its competitive products at rates lower than those published by it, as required by law.

Plaintiff is an Iowa Cooperative Association, organized for the purpose of manufacturing and selling to its own members biologics used in the prevention and treatment of hog cholera. It succeeded to the business of the American Serum Company, which assigned its business, good will, and a portion of the cause of action here involved, and ceased the manufacture and sale of serum.

The Anchor Serum Company, referred to as Anchor, is a Missouri corporation engaged in the manufacture and sale of serum. Defendant, Illinois Farm Bureau Serum Association, referred to as the Association, is a cooperative, incorporated under the Agricultural Cooperative Act of Illinois, 32 Ill.R.S. 1945, sec. 440, et seq. Its members are county farm bureaus or county or state farm organizations whose membership is limited to Farm Bureau members. Its purpose is the dissemination of information relative to diseases of live stock and preventive biologics to be used in the treatment of such diseases, and to act as agent for its members in collectively purchasing, handling and distributing such biologics and other supplies for its members.

Its stock consists of 1000 shares Class A preferred; 2500 Class B preferred; and 1000 common shares. The first and last classes, in approximately equal amounts of each, are owned by its membership, which consists of about 100 Farm Bureaus, or farm organizations located in the 102 counties of Illinois. The Class B preferred was issued to and owned by the Illinois Agricultural Association, in whose offices in Chicago, Serum Association merely has desk room. The sole purpose of the Serum Association, as stated in its charter and by-laws and in its contracts with the County Farm Bureaus, is to act as purchasing agent for all the County Farm Bureaus in Illinois. The relationship between the Association and its members, the Farm Bureaus, is set forth in that membership agreement, which has been in force at all times herein referred to.

That agreement recited that the Association was a state-wide organization formed to provide a central purchasing or manufacturing service for anti-hog choleral serum and virus and other biologics; that the member bureau was desirous of obtaining such central purchasing or manufacturing service and that the Association agreed to act as such purchasing agent; that the County Farm Bureau appointed and constituted the Association as its sole and exclusive agent to bargain for, purchase or manufacture and provide such quantities of serum as such member might require; that the member agreed that it would not purchase serum through or from any other person or persons while that contract remained in force and effect; that the member would buy only from the manufacturer selected by the Association, pay for such serum promptly, and maintain uniform retail prices for serum and other biologics or supplies with other members of the Association, such prices to be determined by the Association; and that in the event that serum was sold by the member to persons not members of a Farm Bureau, then the amount of business done with all of such non-members during any such fiscal year should not exceed in value the amount of business done with members during the same period.

The production and distribution of this serum is regulated by the Federal Serum and Virus Act of 1913, 21 U.S.C.A. §§ 151-158; the Anti-Hog-Cholera Serum and Hog-Cholera Virus Act of 1935, 7 U.S.C.A. §§ 851-855; and the Marketing Agreement executed in December 1936, by and between handlers of serum, including Anchor, and the Secretary of Agriculture, pursuant to the last-named Act. This Agreement classified buyers of biologics as consumers, dealers, wholesalers, and volume contract purchasers, and provided for the appointment of a Control Agency to be composed of members of the industry to supervise operation of the Agreement. Plaintiff's president and Anchor's vice-president were original members of the Control Agency. The Agreement required each serum handler to file with the Secretary of Agriculture and the Agency a list of its selling prices to each class of buyers as defined by the Agreement and the Control Agency, including term os sale and discounts, and it prohibited any sales unless such prices were so posted, and also prohibited any deviation from such posted prices. The Serum and Virus Act, 7 U.S.C.A. § 852, provided that the making of such agreement should not be held in violation of any of the anti-trust laws. Anchor and plaintiff each signed the Agreement and filed a list of its selling prices in compliance therewith.

The Control Agency defined a volume contract purchaser as one who had bought 15,000,000 cubic centimeters of the serum during the previous year, and in early 1937, the Association qualified as such by furnishing pertinent data to the Agency and was thereupon so bulletined to the trade.

Pursuant to the mandate of the Agreement, Anchor posted its prices for serum on December 14, 1936, as follows:

To Consumers, 75› per 100 ccs,

To Dealers, 63› per 100 ccs,

To Wholesalers, 51› per 100 ccs,

To Volume Contract Purchasers, 49› per 100 ccs.

The following legened appeared below its signature to its price list:

"We prepay forwarding charges. We also spend liberal allowances for advertising and sales promotion work."

A like price list was posted by Anchor in January 1938. On July 13, 1939, this list was changed by Anchor with respect to only the following category:

"Volume Contract Purchasers (where no local distribution is required) contracting for at least 35,000,000 ccs of serum and virus to be taken within a period of one year where no local distribution service is required - serum 36› per 100 ccs * * *."

The legend as to the allowances for advertising and sales promotion was omitted.

July 31, 1939, this posting was again changed by Anchor, reducing the price of serum to consumers, from 75› to 70›; to dealers, from 63› to 57›; to wholesalers, from 51› to ...


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